S.African stocks hit by Libyan unrest, rand firms

By IBT Staff Reporter On 02/22/11 AT 3:04 PM

South African resource-heavy stocks slipped on Tuesday as Libyan unrest prompted an equities sell-off while the rand firmed against the dollar, recovering from earlier losses as better-than-expected GDP data boosted the currency.

The JSE Top-40 index of blue chips dropped 1.15 percent to 29,228.79, while the broader All-share index lost 1.1 percent to 32,444.20.

Technical factors show there could be more downside for the Top-40 index. Its 14-day relative strength index, or RSI, is hovering near 50, well above the oversold mark of 30.

It's negative sentiment on the back of what is happening in Libya. Even better-than-expected GDP figures coming out today didn't help to lift our equities markets, said Abri du Plessis, chief investment officer at Gryphon Asset Management.

Political violence in Libya rattled emerging markets, pushing up debt insurance costs in North Africa and the Middle East.

Fourth quarter GDP data came in higher than the market had anticipated, slashing hopes of further rate cuts from the central bank.

The rand traded between 7.1190 and 7.2436, gaining in the later part of the session. At 1600 GMT it was at 7.1225 to the dollar, 0.38 percent firmer than its New York close of 7.15 on Monday.

The currency breached support at 7.21 in the day and dealers say technically, recent closes below 7.18 were the trigger that moved the rand lower.

We're looking to target 7.1120 which was our previous low, the dealer said.

South African government bonds fell to a near one-week low on the data, adding to a risk-off investor sentiment amid political instability in North Africa and the Middle East already weighing on emerging markets.

The yield on the benchmark 2015 closed at 7.765 percent, from 7.675 previously, while that on the 2026 note ended at 8.76 from 8.645 percent.

The market shrugged off a weekly debt auction earlier in the session as focus turned to the monetary budget presentation on Wednesday.